Union Budget 2021-22 Expectations for Income Tax Relief: While Prime Minister Narendra Modi government has turned virtually every single stone to spur development in the Indian economy amid the lockdown, expectations, if any, of additional tax relief look unrealistic at this point. The corporate tax prices had been reduce prior to the pandemic to 22 per cent from 30 per cent for corporations that do not seek exemptions, and to 15 per cent from 25 per cent for new manufacturing firms. Besides, the government had also introduced a new private revenue tax regime in the final spending budget that aimed to reduce tax liabilities for these who did not claim exemptions.
Corporate tax relief
“Before expecting any tax relief, the current economic situation should be factored. GDP is expected to contract by around 8-10 per cent and fiscal deficit is at record high. Further, large scale expenditure on vaccination is on the cards, and on the other hand, there is a need to increase government spending especially capital expenditure,” Divakar Vijayasarathy, Founder and Managing Partner, DVS Advisors LLP, told TheSpuzz Online.
In this backdrop and with restricted avenues to garner sources, expecting substantial scale tax relief would be also fictitious, Vijayasarathy added. However, investment primarily based relief and flexibility in terms of setting off of loss can be anticipated, he additional stated.
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Personal revenue tax relief
The impact of the new private revenue tax regime is however to be noticed as it came into impact from 1 April 2020. While the larger slabs could not see any relaxation, the reduced slabs are anticipated to get some relief. “On the individual front, tax for the higher strata would remain unchanged but there could be some relief in terms of adjustment in tax rates or increase in limits for the lowest slab,” Vijayasarathy underlined.
However, any relief offered on the tax front will add burden to the government’s income. “Individual taxpayers would greatly benefit from reduction in personal income tax rates. This would increase cash in hand for them, combined with other measures this could boost consumption in the economy, leading to overall growth and improvement in the economic situation,” Archit Gupta, Founder and CEO – ClearTaX, told TheSpuzz Online. However, offered that the government will most likely be in an unfavourable fiscal scenario, this will be a strain on the exchequer, Gupta added.